Hey there, fellow local business owners! It’s great to reconnect with you. Life’s been busy on my end with a recent move and turning my old home into a rental property. In the chaos, I relearned a few truths: I used to have a great team around me that helped me get things done. Flying solo I learned that it is all up to me to get things done and I am really bad at getting things done! The other thing I learned is to thank those around you that help you when you got too much on your plate. If you have a great team around you, make sure they know how much you appreciate them.
Below are 5 mindset shifts that every small business owner will have to make in order for their business to be more profitable, give them more freedom and ultimately become more valuable when it is time to sell it.
Shift 1: From Owner-Dependent to Owner-Optional
If your business can’t run without you, you don’t own a business—you own a job. Think about the big players: the owner of Starbucks doesn’t pour your coffee. Jeff Bezos isn’t mailing your order. They created a company that runs without them involved in the day to day.
You can’t scale and sell something that can’t run without you!
Quick Wins
- Identify the top 3 tasks only you can do. Delegate or train everything else over the next 30–60 days.
- Use a simple “Who owns what?” chart. Every recurring task has a clear owner and a backup.
- Set one “no-you” day per month where the team runs the show. Debrief what broke and fix it.
Shift 2: From Verbal Instructions to Documented Systems
“Let me show you real quick” is expensive. Documented, step-by-step processes create consistent results, reduce training time, and protect your margins.
What to Document First
- Money moments: estimates, invoices, collections, refunds.
- Customer moments: greeting, complaint handling, service recovery.
- Quality moments: checklists for start-of-day, end-of-day, job sign-off.
Pro Tip: Record a clean screen-share or phone video while you do a task once. Transcribe it into a simple SOP: Purpose → When → Steps → Checklist → Standard of Done.
Shift 3: From Guesswork to Five-Number Financial Clarity
Your P&L tells a simple story if you read the five numbers that matter. Track these every month (and glance weekly), and you’ll make better pricing, hiring, and marketing decisions—without surprises at tax time.
The Five Numbers (and how to use them)
- Gross Revenue (Sales)
- What it is: All money earned before any deductions.
- Why it matters: Sets the ceiling for everything else.
- Action: Track by source (Google, referrals, repeat customers) so you know where to invest.
- COGS (Cost of Goods Sold)
- What it is: Direct costs to deliver the job—field labor, materials, subcontractors, shipping, job-specific supplies (not overhead like rent or software).
- Action: Flag any job where COGS > 50% of revenue (service) or where material/labor creep is trending up.
- Gross Profit (Revenue − COGS)
- What it is: The dollars left after doing the work.
- Key %: Gross Margin = Gross Profit ÷ Revenue.
- Healthy ranges (general guidance):
- Service/local trades: 50–65%
- Retail/product-heavy: 30–45%
- Action: If gross margin is low, fix price, scope, or execution—not marketing.
- Fixed Costs (Overhead)
- What it is: Costs that don’t rise directly with each job—admin payroll, rent, trucks, insurance, marketing, software, owner’s salary, utilities.
- Key %: Overhead Ratio = Fixed Costs ÷ Revenue.
- Action: Know your monthly “nut.” Aim to keep overhead lean enough that Gross Margin ≥ Overhead Ratio + Target Net Margin.
- Net Profit (Gross Profit − Fixed Costs)
- What it is: The money you keep after overhead.
- Key %: Net Margin = Net Profit ÷ Revenue.
- Healthy target for many local services: 10–20% (varies by model).
- Action: Treat net margin like a non-negotiable bill you “pay” yourself first in your pricing.
Read Your P&L in 5 Minutes
- Step 1: Note Revenue and COGS → confirm Gross Margin % is on target.
- Step 2: Scan Fixed Costs → anything up >10% month-over-month gets a quick explanation.
- Step 3: Confirm Net Margin % meets target. If not, decide which lever to pull this month: raise price, reduce COGS, or trim overhead.
Price-Setting Quick Calc (bookmark this)
To hit a target net margin, you need enough gross margin to cover overhead and profit:
- Required Gross Margin % = Overhead Ratio + Target Net Margin
- Required Price = COGS ÷ (1 − Required Gross Margin %)
Example:
COGS per job = $120
Overhead Ratio = 30% (0.30)
Target Net Margin = 15% (0.15)
Required Gross Margin = 0.30 + 0.15 = 0.45
Price = $120 ÷ (1 − 0.45) = $218.18 → round to $219+
One-Page Dashboard (update weekly)
- Revenue (MTD / YTD)
- COGS (MTD / YTD)
- Gross Profit & Gross Margin %
- Fixed Costs (MTD; last 3-month average)
- Net Profit & Net Margin %
Add three mini notes: What went up? What went down? What will we change next month?
Mini Example (July)
- Revenue: $120,000
- COGS: $54,000 → Gross Profit: $66,000 (55%)
- Fixed Costs: $48,000 (40% of revenue)
- Net Profit: $18,000 → 15% net margin
Decision options:
- Raise prices ~6–8% on low-margin services,
- Trim COGS 3–5 pts via tighter scope/material standards, or
- Cut $6k/month of low-ROI overhead.
Pick one lever this month, measure next month, and keep stacking small wins.sanity, cash is reality.
Shift 4: From Employees to an Empowered Team
Skills can be trained; ownership can’t. Hire for values and attitude, then teach the craft. Give people the “why,” not just the “what.”
Make Ownership Real
- Share the scoreboard: weekly KPIs on a one-page dashboard.
- Run short, focused huddles: yesterday’s results, today’s plan, blockers.
- Recognize by behavior and result: “You followed the recovery SOP and saved that account.”
Culture Cue: “We don’t pass problems up; we bring solutions with them.”
Shift 5: From Risky to Recurring Revenue
A few big clients = concentration risk. Build a broader base and stabilize with subscriptions, service plans, or seasonal contracts.
Recurring Ideas
- Maintenance plans (monthly/quarterly) with priority scheduling.
- Bundled packages (e.g., “Clean + Protect + Inspect”).
- Annual agreements with auto-renew and small incentives for prepaying.
Why It Matters: Recurring revenue smooths cash flow, lowers marketing costs, and greatly increases valuation when you’re ready to sell.
Put It Together: Profitable Today, Sellable Tomorrow
These shifts make your business easier to run now and more attractive to a buyer later. Buyers pay for durable systems, a capable team, clean financials, and reliable revenue—not heroics.
If you want a clear picture of your gaps and a simple plan to close them, I’m offering a free business assessment. You’ll get a 12-month action plan tailored to your goals.
Final Thought
You’re not just building a business that pays the bills. You’re building one that gives you freedom—and, when the time is right, the satisfaction of a well-earned paycheck. Keep going. You’ve got this.
P.S. If you enjoy real stories from local owners who’ve made these shifts, check out my podcast, Locally Owned. It’s packed with practical ideas you can use this week.
Leave a Reply